Tim Paradis
Associated Press
September 22, 2008
Wall Street fell in early trading Monday as investors nervously awaited further news about the government’s plan to buy $700 billion in banks’ mortgage debt. The Dow Jones industrials were down more than 150 points while the credit markets remained nervous, but not showing the signs of panic that Treasury trading saw last week.
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Investors are relieved that federal authorities are taking action to relieve the nation’s banks of their toxic assets. But it is not sure yet how successful the plan will be in loosening up the credit markets and propping up the sinking housing market.
Bush administration officials and congressional leaders have been meeting on the rescue plan, the main thrust of which congressional leaders have endorsed.
Investors are also digesting a mix of corporate news. Microsoft Corp. said it plans to repurchase its shares. And Morgan Stanley said it is working to sell up to a 20 percent stake to Japan’s Mitsubishi UFJ Financial Group Inc.
The Federal Reserve on Sunday granted Morgan Stanley and Goldman Sachs, the country’s last two major investment banks, approval to change their status to bank holding companies. The change of status will allow the companies to set up commercial banks that will be able to take deposits, significantly bolstering the resources of both. They also will be subject to more regulation.
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